"Sticky" land prices
"Land prices are another story," says Kenneth Wenhold, director of the Mid-Atlantic region for Metrostudy, a housing-industry market research firm. "They're very easy to go up. It's very hard for them to go down."
In economist-speak, they're "sticky." (So, economists say, are home prices, though not as sticky as many assumed three years ago.)
"We really haven't seen significant declines" in sale prices, Wenhold said. "There are a lot of people who are shopping properties, and the prices might be discounted slightly, but not to the extent that the market will bear."
He has an interesting point to make about Maryland's situation.
Of the 48 markets Metrostudy covers nationwide, "Maryland is the most lot-constrained. ... There's definitely a shortage of lots, especially in certain counties in the Baltimore region as well as the D.C. region. What you're seeing is, [on] well-located lots, developers aren't willing to negotiate on prices."
Their theory is that builders will have to buy eventually if they want to -- you know -- build.
Builders don't have loads of land left in their pipelines, Wenhold said, and in Maryland it sometimes takes two years to get the approvals you'll need to move forward on a project. Builders are trying to crystal-ball a resurgence in demand because they'll need to buy months beforehand.
"That is the art of real estate, residential real estate, right now," he said. "All builders are wrestling with it. It's a question of, do we want to commit or do we want to wait? And if we do wait, there's a risk we're not going to have a presence in certain submarkets."
